Karl Blew It

“The billionaire donors I hear are livid,” one Republican operative told The Huffington Post. “There is some holy hell to pay. Karl Rove has a lot of explaining to do … I don’t know how you tell your donors that we spent $390 million and got nothing.”

Comments

The problem with the Republican party are the Karl Rove’s, the Romneys and the perceived notion of the billionare party. The whole party has become too extreme and too ideological, and neglects whole segments of conservatives who may be fiscally conservative, but agree with things like gay marriage rights, or women’s health care.

Hell, the PBS thing was so freaking out of touch, it was silly. Like republican children do not watch Sesame Street or Curious George.

I hope some good can come of this Republican beat down here and it is time to revamp the party and get some of these old dogs out of here and put some fresh blood in. The McCains, the Bushes, The Romneys, their time has passed, it is time to move the party from the far extremism of the right and more to the center, and that may mean accepting more socially minded ideals

It’s not just the social issues though. Their economic platform legitimately has nothing to offer non-millionaires. Their economic policies are geared to the party’s funders, and they hold downscale whites in line with a racial solidarity message. This election showed you can’t win a national election like that anymore. Obama got Dukakis’ share of the white vote and still won big.

I think jobs are created when willing workers meet willing employers and agree on terms of trade. How many jobs get created, and the wages paid for those jobs, depends on how much demand there is for specific products, but also on the total level of demand in the economy. Hard-working risk-taking entrepreneurs and workers influence how much demand there will be for specific products and services. But the overall level of demand in the economy – how much money people have to spend on stuff, and their willingness to spend it – is determined by the Federal Reserve and Congress. If the Fed runs a monetary policy that is too tight to produce full employment, then jobs and wages suffer. If the Fed runs a looser monetary policy that’s consistent with full employment of the country’s productive resources, then we get a tight labor market with more wage growth. I hope you won’t interpret that as me minimizing the role of entrepreneurs and business owners, or workers. They have a crucial role to play in influencing how demand is allocated in the economy. But the fiscal and monetary authorities also have a crucial role to play in managing the overall level of demand.

That’s the role entrepreneurs deserve credit for. Apple has invented some great products and done a great job persuading millions of people that they should prefer to have Apple products instead of cash, or instead of other stuff they might want. The role of monetary policy in this scenario is maintaining sufficient levels of employment and wage growth that there is a large market of people who have jobs and enough disposable income to buy iPhones.

Arguing that the Fed has done a lot is not an argument that the Fed has done enough. The problem with monetary policy is that the interest rate that would clear the labor market has been around -5%. By now it’s probably up to about -2%. Nominal rate can’t go below 0 though, so we have high unemployment. As time goes on, the natural rate of interest will keep climbing, and the Fed will hold rates low long enough to clear the labor market.

I posted this before i think, but i still do not understand the love affair the left has with the fed. The current fed’s easing policies has done nothing but the following:
1. Kept interest rates artificially low, hurting seniors who rely on investment income to live on.
2. Created a bubble in the stock market, in which the average american investor is not participating in. Take a look at the volume trend in the stock market over the last few months. It is miniscule. Joe sixpack is out of the market and the volume is literally computers pushing volume back and forth.
3. The FED is enriching the very individuals and Organizations who have a lot of responsibility for the financial mess, the banks, at the expense of the taxpayer. A good chunk of the stimulus never hit the open consumer market, it has all gone to sit on the bank’s balance sheet as repair reserves.

You want to create jobs, you need to do two main things. You need to streamline the tax code and lower the corporate tax rate and you need to get the state and local governments out of the way to foster small business start ups.
I use your hot dog vendor analogy. City of Bethlehem basically killed that guy with all the permits, regulations, hearings, zoning issues etc. If they did not get in the way, my guess is he would have flourished, maybe hiring additional people, buying supplies, PAYING TAXES etc. Instead red tape killed him. Swap him out for any other small business and you will see that the initial entrance regulation from the Gov hinders new start ups.
2. You also need to cut down the government’s take in taxes on small business. Everybody focuses on the tax rate, which is entirely too high, what they miss is all the other governmental service fees/re taxes/buisness priv taxes the local authority imposes BEFORE the Federal Gov takes their fair share. Ultimately, it becomes a simple risk/reward calculation from the owners and it is not worth the effort and risk, if they keep smaller and smaller portions of funds. It is in everybody’s benefit to move that cash on the sidelines and put it in play; however, if there is no incentive to do so, it will continue to sit there

The point of the Fed’s policy is to push mortgage interest rates down and spark a mortgage refi boom. There are other things they could be buying – muni bonds for example. There are better ways to give freshly printed money directly to real people, but that’s the goal anyway.

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